How Do Global Banking Regulatory Norms, Implemented by Bank of Ghana, Differentially Affect Lending Behavior by Commercial Banks and Rural Banks In Ghana?

Abstract

This thesis examines how capital requirements set by the Bank of Ghana affect lending differently at commercial banks versus rural banks. The central question is not only why developing countries adopt international banking standards they had no hand in designing, but how those standards play out differently depending on the type of bank. Using ten years of commercial bank data and interviews conducted in Ghana, the study estimates four statistical models and analyzes qualitative evidence from fieldwork. The data shows that higher capital requirements are associated with less lending at commercial banks, but more lending at rural banks. Three structural reasons explain this pattern. First, international commercial banks already operate above Bank of Ghana thresholds because their parent institutions abroad impose stricter standards, meaning the local requirements add no additional constraint on their lending behavior. Second, most Ghanaian small businesses lack the documentation that Basel-based risk systems require, making them effectively invisible to formal credit. Third, rural banks use group lending and community trust structures that do not depend on that documentation at all. The fieldwork also surfaces a third category of lender, fintech mobile credit providers that extend loans based on transaction data and operate entirely outside Basel regulation. Taken together, the findings suggest that adopting international banking standards in Ghana is reshaping not just who gets credit within existing banks, but the broader structure of who provides credit in the economy.